Quiz 6: Consumer Choice and Demand

Utility is A)easily measured because all people derive the same utility from consumption B)easily measured because it is an objective concept C)easily measured because it is a subjective concept D)hard to measure because it is a subjective concept E)hard to measure because it is an objective concept

Which of the following is true of units of utility? A)Each unit is worth $1. B)They cannot be compared across consumers. C)They apply to goods but not to services. D)They do not exist for very wealthy individuals. E)They are negative for inferior goods.

Which of the following statements cannot be made regarding consumer preferences? A)Pat enjoys her second cotton candy less than her first. B)Bill enjoys his second cotton candy as much as the first. C)Arnie enjoys two cotton candies more than one cotton candy. D)Arnie enjoys two cotton candies more than Pat enjoys one cotton candy. E)Bill and Arnie enjoy their second cotton candy less than they do their first.

Which of the following statements concerning utility is correct? A)It is possible to precisely measure the utility an individual receives from consuming a particular good or service B)It is always possible to determine whether Dalene or Juloy gets more utility from consuming two units of the same good C)The utility of goods can be measured while the same is not true for services D)Utility is a subjective measure of satisfaction an individual receives from consuming a good or service E)It is only useful if there is no scarcity

Consumer preferences A)do not vary from one consumer to another B)have little to do with personal tastes and income C)are not influenced by the utility of goods D)are individual evaluations of goods and services E)can be objectively measured and compared across individuals

Different people may have different tastes, but their tastes do not change over time.

Marginal utility can be objectively measured and compared from one individual to another.

Utility is A)the sense of pleasure or satisfaction derived from consuming goods and services B)the cost of acquiring goods and services C)the profit consumers earn from consuming goods and services D)the monetary value to consumers of goods and services E)the desire to consume goods and services

Economists assume people's tastes are A)determined solely by advertising B)relatively stable over time C)quite variable D)irrelevant to utility analysis E)identical

Utility is determined by an individual's A)income B)price C)relative price D)profit E)tastes and preferences

Marginal utility is the A)overall satisfaction obtained from consuming a good B)additional satisfaction obtained from consuming one more unit of a good C)average satisfaction obtained from consuming a good D)the change in satisfaction obtained from consuming 1 percent more of a good E)additional cost of one more unit of a good

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the first glass of milk is A)0 units of utility B)5 units of utility C)8 units of utility D)12 units of utility E)14 units of utility

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the second glass of milk is A)0 units of utility B)5 units of utility C)8 units of utility D)12 units of utility E)14 units of utility

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the third glass of milk is A)0 units of utility B)5 units of utility C)8 units of utility D)12 units of utility E)14 units of utility

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the fourth glass of milk is A)0 units of utility B)5 units of utility C)8 units of utility D)12 units of utility E)14 units of utility

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.Which of the following statements is true? A)the marginal utility of milk is always positive B)the marginal utility of milk first increases, reaches a maximum and then decreases C)the marginal utility of milk is diminishing throughout D)the marginal utility of the 4th glass of milk is greater than the marginal utility of the 1st glass of milk E)the marginal utility of milk while diminishing is always greater than zero

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The total utility curve does not exhibit diminishiung returns.

Exhibit 6-2 Consider Exhibit 6-2 which shows the marginal utility of consuming milk.The total utility from 2 glasses of milk is A)0 units of utility B)30 units of utility C)35 units of utility D)65 units of utility E)impossible to determine

Exhibit 6-2 Consider Exhibit 6-2 which shows the marginal utility of consuming milk.The total utility from 3 glasses of milk is A)25 units of utility B)30 units of utility C)35 units of utility D)65 units of utility E)90 units of utility

Marginal utility is a measure A)of total utility derived from consuming a given amount of a good B)of the total utility gained from consuming an extra unit of a good C)computed by dividing total utility by the amount of a good consumed D)determined by production conditions in a market E)of the cost associated with consuming one more unit of a good

The law of diminishing marginal utility implies it is possible that the marginal utility of my tenth pistachio nut is less than the marginal utility of my third pistachio nut, other things constant.

The law of diminishing marginal utility implies that the marginal utility of my fifth hot dog is less than the marginal utility of my second soft drink, other things constant.

As a consumer buys more of a good, total utility eventually becomes negative.

If marginal utility is negative, total utility is negative.

Marginal utility is negative only when quantity demanded is negative.

Positive marginal utility implies increasing total utility.

Demand curves usually slope downward because of the income and substitution effects, and because of the law of diminishing marginal utility.

Total utility can be calculated as the A)sum of all marginal utilities B)price paid for one unit of a good C)product of all marginal utilities D)total expenditure on all units of a good the consumer buys E)difference between the marginal utilities of the first and last units of a good

Marginal utility is defined as the A)average amount of satisfaction gained from consuming a product B)total amount of satisfaction gained from consuming a product C)additional satisfaction gained from consuming one more unit of a product D)total amount of satisfaction gained from consuming a product divided by the number of units consumed E)total amount of satisfaction gained from consuming a product times the number of units consumed

The law of diminishing marginal utility states that A)total utility falls as more of a good is consumed, other things constant B)total utility falls as marginal utility falls, other things constant C)marginal utility falls as total utility increases, other things constant D)marginal utility falls as more of a good is consumed, other things constant E)marginal utility falls as less of a good is consumed, other things constant

"The marginal utility received from each additional unit of a good consumed declines, other things constant." This is a statement of the law of A)increasing marginal returns B)marginal rate of substitution C)supply D)diminishing marginal utility E)demand

Diminishing marginal utility means that A)as you consume more of a good, other things constant, the total satisfaction you obtain from consuming this good tends to fall B)as you hire more labor, other things constant, the total amount produced begins to fall C)as you hire more labor, other things constant, the marginal product begins to fall D)as you consume more of a good, other things constant, the additional satisfaction you obtain from each additional unit of the good tends to fall E)as you consume more of a good, other things constant, the extra satisfaction you obtain from each extra good becomes negative

Which of the following illustrates the law of diminishing marginal utility? A)The marginal utility of Diane's second Coke is greater than the marginal utility of her third pretzel, other things constant. B)The marginal utility of Diane's second Coke is greater than the marginal utility of Ken's third pretzel, other things constant. C)The marginal utility of Diane's second Coke is greater than the marginal utility of her third Coke, other things constant. D)The total utility of one Coke is greater than the total utility of two Cokes, other things constant. E)The marginal utility of Diane's second Coke is greater than the marginal utility of Ken's third Coke, other things constant.

Which of the following sayings describes the concept of diminishing marginal utility? A)time is money B)penny wise and pound foolish C)absence makes the heart grow fonder D)a penny saved is a penny earned E)a fool and his money are soon parted

The law of diminishing marginal utility states that as you consume more and more of a good, other things constant, A)total utility eventually rises B)marginal utility can become positive C)marginal utility approaches, but never becomes, zero D)total utility can never become negative E)marginal utility eventually declines

The marginal utility of a second copy of today's New York Times is A)infinite B)practically zero C)positive and greater than the marginal utility of the first copy D)equal to the marginal utility of the first copy E)50 cents

The reason that you don't drink five cups of coffee at breakfast is that A)the marginal utility of extra cups of coffee eventually diminishes B)most people cannot afford five cups C)the total utility of coffee rises as you consume more cups D)the price of coffee rises as you buy more cups E)the marginal satisfaction derived from cups of coffee remains constant

"The second glass of Evian water was very good.May I have another?" Which of the following is necessarily true regarding this statement? A)The marginal utility of the second glass is negative. B)The marginal utility of the second glass is less than the marginal utility of the first glass. C)The marginal utility of the second glass is positive. D)The water is free. E)The marginal utility of the third glass is negative.

"I don't feel so good.I shouldn't have had that last doughnut." Which statement best describes this situation? A)The marginal utility of the last doughnut was positive. B)The marginal utility of doughnuts is still increasing. C)The total utility from eating doughnuts is negative. D)The marginal utility of the last doughnut was negative. E)The marginal utility of the next doughnut will be positive.

Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4.What do they know about consumer preferences? A)Consumers would never buy a second ice cream cake. B)Two cakes are worth less to the consumer than one. C)Marginal utility of ice cream cakes diminishes. D)Consumers only value the first cake at $4. E)Consumers value all cakes they eat at $4.

If other things constant, as more bananas are consumed, marginal utility eventually A)decreases at the same rate for all people B)decreases at the same rate for all goods for a given person C)increases at the same rate for all people D)decreases at different rates for different people and for other goods E)decreases at different rates for different people but at the same rate as other goods for an individual

Joe the Economist tells his wife, Jane, that he wants to spend a weekend fishing with his friends.She replies, "You don't love me anymore." Just before she hits Joe with a croquet mallet, Joe explains to her that she has confused the concepts of A)marginal utility and price B)income and price C)marginal utility and total utility D)love and death E)consumer surplus and utility

Newspaper vending machines illustrate that publishers believe A)the average utility of two identical papers is zero or less B)the total utility from two identical newspapers is zero or less C)the marginal utility of a second identical newspaper is zero or less D)the marginal utility of a second identical newspaper is greater than the marginal utility of the first newspaper E)the total utility from two identical newspapers is less than the total utility from the first newspaper

Negative marginal utility means that A)total utility is also negative B)marginal utility increases as additional units are consumed C)the price of the product increases as additional units are consumed D)the total revenue spent on the product decreases as more of the product is purchased E)total utility decreases as additional units are consumed

The law of diminishing marginal utility implies that the marginal utility of my fifth waffle is less than the marginal utility of my friend's second waffle, other things constant.

When total utility is falling, marginal utility is A)increasing B)decreasing C)positive D)negative E)0

Exhibit 6-3 In Exhibit 6-3, what is the marginal utility of the third pretzel? A)5 B)10 C)15 D)-0.15 E)55

Exhibit 6-3 In Exhibit 6-3, what is the total utility of three pretzels? A)5 B)15 C)40 D)55 E)70

Exhibit 6-4 In Exhibit 6-4, where does marginal utility first begin to diminish? A)sometime after the first unit consumed B)sometime after the second unit consumed C)sometime after the third unit consumed D)sometime after the fourth unit consumed E)sometime after the fifth unit consumed

If marginal utility is positive, then total utility is A)constant B)negative C)increasing D)decreasing E)0

Exhibit 6-5 In Exhibit 6-5, the total utility of consuming three scones is A)34 B)6 C)22 D)12 E)24

Exhibit 6-5 In Exhibit 6-5, the marginal utility of consuming the second scone is A)12 B)9 C)8 D)19 E)6

Exhibit 6-5 In Exhibit 6-5, the marginal utility of consuming the fourth scone is A)4 B)7 C)6 D)24 E)2

Exhibit 6-5 In Exhibit 6-5, the total utility of consuming five scones is A)82 B)30 C)34 D)27 E)2

Exhibit 6-5 In Exhibit 6-5, the marginal utility of consuming the first scone is A)0 B)2 C)8 D)9 E)10

Exhibit 6-6 Using Exhibit 6-6, calculate the marginal utility of the third plum consumed. A)4 B)6 C)24/3 D)9 E)24

Exhibit 6-7 Consider Exhibit 6-7.Which of the following is true? A)A fourth can of Pepsi increases total utility by 12, to 126. B)A fourth can of Pepsi increases total utility by 18, to 114. C)A fourth can of Pepsi increases total utility by 114. D)All four cans of Pepsi together yield a total utility of 18. E)All four cans of Pepsi together yield a total utility of 322.

Exhibit 6-8 Consider Exhibit 6-8.Which of the following best describes what it reveals about total and marginal utility for baseball game tickets? A)Marginal utility is constantly pulling total utility down, until eventually it becomes negative. B)Marginal utility is constantly pulling total utility up and will continue to increase total utility as long as the person consumes more goods. C)Marginal utility is constantly pulling total utility up, but by less each time. D)At first marginal utility is positive and pulls total utility up but at a decreasing rate; then marginal utility becomes negative and pulls total utility down. E)At first marginal utility is positive and pulls total utility up, but then it becomes negative and makes total utility become negative as well.

The fact that the washroom usually has paper towels left (free to the consumer)suggests that the marginal utility of paper towels quickly diminishes to 0 for each consumer.

A free good (price = $0)will be consumed up to the point at which its marginal utility is zero.

If a good is offered to you free of charge, then you A)never stop consuming it B)stop consuming it when its marginal utility begins to fall C)stop consuming it when its marginal utility begins to increase D)stop consuming it when its marginal utility equals 0 E)stop consuming it when its total utility equals 0

A consumer maximizes utility when the marginal utilities of all goods A)having positive money prices that are equal to zero B)are equal C)are maximized D)are equal to the opportunity costs for all goods that are considered necessities E)are exactly proportional to their market prices

If the price of a good is 0, a consumer will A)consume all units that have positive total utility B)consume an infinite quantity C)consume all units with positive marginal utility D)consume the entire amount supplied E)consume until total utility becomes 0

Suppose you go to a wedding reception that has free drinks.What is likely to be the marginal utility of the last drink you had? A)infinite B)0 C)1 D)less than 0 E)greater than 1

If Dalene's marginal benefit from consuming another cookie is greater than the price of the cookie, then A)Dalene will not purchase any more cookies B)the opportunity cost of the cookie is lower than the price C)Dalene's utility will decrease if she purchases the cookie D)Dalene will increase her total satisfaction by purchasing the additional cookie E)she has purchased too many cookies

If the marginal utility of each good a consumer buys does not diminish but remains constant, we should see consumers A)buying no goods at all B)spending all of their income on the good with the highest marginal utility C)buying one unit of each good D)buying only the least expensive good E)leaving the store in total confusion

Suppose Enid could increase her total utility by purchasing one more book and one less video rental.Which of the following is true? A)The marginal utility of video rentals exceeds the marginal utility of books. B)The marginal utility of books exceeds the marginal utility of video rentals. C)The marginal utility of video rentals is negative. D)The marginal utility per dollar spent on books exceeds that of video rentals. E)Total utility is at a maximum.

As long as scarcity exists, A)product prices play no role in utility maximization B)income plays no role in utility maximization C)income and product prices must both be considered in utility maximization D)consumers maximize utility by consuming all products until their marginal utility is zero E)product prices will be zero

In terms of utility theory, "equilibrium" in the real world means that A)households are consuming as much of every commodity as they would like B)households have spent their incomes in such a way that their overall satisfaction is maximized C)households have spent their incomes in such a way that their marginal utility is maximized D)households have spent their incomes in such a way that their marginal utility is zero for every product consumed E)households have spent their incomes in such a way that their total utility is zero

A utility-maximizing consumer equalizes marginal utilities across all goods.

Consumers must understand the law of diminishing marginal utility in order to maximize their satisfaction.

When a consumer spends income so that the ratio of marginal utilities (MUs)of all goods purchased equals the ratio of their prices, the consumer is A)maximizing marginal utility B)spending too much on all goods C)maximizing total utility D)beyond the point of diminishing marginal utility E)behaving in opposition to the principal of rational behavior

As a consumer allocates income between good A and good B, total utility is maximized when A)the marginal utility of A = the marginal utility of B B)the marginal utility of A = the marginal utility of B = 0 C)the price of A = price of B D)marginal utility of A/price of A = marginal utility of B/price of B = 0 E)marginal utility of A/price of A = marginal utility of B/price of B

Suppose that for Jason the marginal utility of $50-per-serving caviar is 100 and the marginal utility of $1-per-serving popcorn is 10.For his snack, Jason should buy A)the caviar if he has the $50; otherwise the popcorn B)the caviar if he has the $50; otherwise nothing C)the popcorn, whether he has the $50 or not D)one serving each of the caviar and popcorn, if he has $51 E)five servings of popcorn for each serving of caviar

If Ellie Mae spends her income on possum and biscuits and the price of possum is three times the price of biscuits, then when Ellie Mae maximizes total utility, she will buy A)equal quantities of possum and biscuits B)three times as much possum as biscuits C)three times as many biscuits as portions of possum D)biscuits and possum until the marginal utility of possum is three times the marginal utility of biscuits E)biscuits and possum until the marginal utility of biscuits is three times the marginal utility of possum

Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget.If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would A)eat a fourth calzone because it has a higher marginal utility B)drink a third glass of juice because you've had less juice C)consider the total utility received so far from calzones and juice before deciding what to consume next D)consider the relative prices of calzones and juice before deciding what to consume next E)consider whether or not marginal utility is diminishing before deciding what to consume next

Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget.If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would A)eat a fourth calzone because it has higher marginal utility B)drink a third glass of juice C)drink a third glass of juice if its price is lower than the price of calzones D)drink a third glass of juice if its price is less than half the price of the calzone E)drink a third glass of juice because it has lower marginal utility

When income is allocated to two goods, x and y, consumer equilibrium occurs when A)MU_x = MU_y B)MU_x = MU_y, and the budget is exhausted C)MU_x/P_y = PU_x/P_y D)MU_x/P_y = PU_x/P_y, and some money is not spent E)MU_x/P_y = PU_x/P_y, and the budget is exhausted

Exhibit 6-9 Suppose you have $30 to spend on either bowling or billiards.A game of billiards costs you $4, and bowling costs $2 per game.Using the information in Exhibit 6-9, determine the utility-maximizing combination of bowling and billiards. A)four billiards games, four games of bowling B)five billiards games, two games of bowling C)three billiards games, eight games of bowling D)five billiards games, five games of bowling E)twelve games of bowling

A utility-maximizing consumer who is considering two goods, x and y, would allocate her budget in such a way that A)MU_x = MU_y B)MU_x > MU_y C)MU_x/P_x > MU_y/P_y D)MU_x/P_x = MU_y/P_y E)MU_x/P_x < MU_y/P_y

Suppose you eat at a restaurant that serves clams at a fixed price and crab legs at a price that varies based on market conditions.Each week, the marginal utility you attach to an order of crab legs is 100, and the marginal utility of an order of clams is 50.One week you have crab legs, but the next week you have clams.This means that A)you are irrational B)your tastes must have changed C)the price of clams dropped below the price of crab legs D)the price of crab legs increased E)the price of crab legs must have increased to more than twice that of clams

Your marginal utility of a third waffle is 10 and your marginal utility of a second piece of ham is 30.If you eat the third waffle, which of the following must be true? A)You are irrational. B)You prefer waffles. C)The price of a waffle is less than one third the price of a piece of ham. D)The price of a waffle is more than the price of a piece of ham. E)The price of a waffle is three times the price of a piece of ham.

Fernando allocates his lunch money between pizza and Coke.A Coke has a price of $1 and a slice of pizza has a price of $1.50.The marginal utility of the last slice of pizza Fernando ate today was 30, and the marginal utility of his last Coke was 25.Fernando spent all of his lunch money.From this information we can conclude that A)Fernando allocated his money in a way that maximized his total utility B)Fernando's total utility would have been greater if he had purchased more Coke and less pizza C)Fernando's total utility would have been greater if he had purchased more pizza and less Coke D)Fernando could have increased his total utility by purchasing more Coke but the same quantity of pizza E)Fernando could have increased his total utility by purchasing more pizza but the same quantity of Coke

The law of diminishing marginal utility may be illustrated by a person A)buying additional goods after getting a pay raise B)eating more twinkies but enjoying them less C)giving some of income to a needy person D)who spends more hours studying than do his fellow students E)buying goods so long as their marginal utility is greater than zero

Suppose you have spent your entire budget and, for all the goods you purchase, the marginal utilities per dollar spent are identical.Which of the following is true? A)You are being irrational. B)You can increase your utility by reallocating your income. C)You will reduce your utility if you allocate income in any other way. D)You are minimizing your marginal utility. E)You can avoid diminishing marginal utility.

If by purchasing a little more milk and a little less ice cream you could increase your total utility, A)the MU of milk must be greater than that of ice cream B)the MU of ice cream must be greater than that of milk C)the MU/P of milk must be greater than that of ice cream D)milk must be cheaper than ice cream E)the MU of milk will increase

If Arnold thinks his last dollar spent golfing yields less satisfaction than the last dollar spent on movies, and Arnold is a utility-maximizing consumer, he should A)golf more so that the total satisfaction from this activity will increase B)spend less on movies so that the marginal satisfaction from expenditures in this area will increase C)golf less and spend more on movies D)eliminate golfing from his schedule E)golf more since it costs less

Basil is maximizing his utility from consuming tea and crumpets.If the marginal utility of his last cup of tea was 24 units of utility and that of his last crumpet was 6 units of utility, which of the following is true? A)The price of tea is six times the price of crumpets. B)The price of crumpets is four times the price of tea. C)The prices of tea and crumpets are equal. D)The price of tea is four times the price of crumpets. E)The MU of the next cup of tea is less than the MU of the next crumpet.

Basil is maximizing his utility from consuming tea and crumpets.If the marginal utility of the last crumpet was 32 units of utility and the prices of tea and crumpets are $4 and $8, respectively, what was the marginal utility of the last cup of tea Basil consumed? A)2 units of utility B)12 units of utility C)$6 D)128 units of utility E)16 units of utility

Suppose a glass of orange juice has a price of $2 and a glass of soft drink has a price of $1.If the consumer is maximizing utility, A)juice must have higher MU than soda drink B)the soft drink must have higher MU than juice C)both must have equal MU D)consumers would buy more soda drink than orange juice E)the consumer would buy twice as much orange juice as soft drink

If the price of a good falls, the marginal utility per dollar received from consuming a specific unit of that good A)also falls B)stays the same C)rises D)will rise or fall, depending on the consumer E)remains unchanged, provided the consumer buys no more of the good

The law of diminishing marginal utility explains why an individual's demand curve is elastic.

If MU_x/P_x > MU_y/P_yx, the consumer can increase utility by buying more of good x.

If MU_x/P_x > MU_y/P_y, the consumer can increase utility by buying more of good x, which will cause the MU_x to rise.

If MU_x/P_x > MU_y/P_y, the consumer can increase utility by buying less of good y, which means the MU_y will rise.

When residential water users are charged a flat monthly rate for water, the marginal cost of an extra thousand gallons of water to a household is zero.

To derive a demand curve using utility analysis, A)change a consumer's marginal utilities and note the effect of demand curve changes on market prices B)change a consumer's marginal utilities and note the effect of supply curve changes on market prices C)change a consumer's marginal utilities and note the effect of supply and demand curve changes on market prices D)note how the consumer's utility-maximizing consumption bundle changes in response to price changes E)note how the consumer's utility-maximizing consumption bundle changes in response to demand-curve shifts

In order to derive a demand curve for cheese, we would change A)income and hold other things constant B)tastes and hold other things constant C)the price of other goods and hold everything else constant D)the price of cheese and hold other things constant E)the price of all goods, including cheese and hold other things constant

Which of the following varies along a given demand curve? A)consumer preferences B)prices of substitutes C)prices of complements D)the price of the good itself E)income

Suppose Lorna will buy more sweaters if the price of sweaters rises.She is violating the A)law of supply B)law of increasing costs C)law of large numbers D)law of diminishing costs E)law of demand

The law of demand states that A)quantity demanded is inversely related to price B)quantity demanded is directly related to income C)marginal utility is inversely related to quantity consumed D)total revenue is directly related to price E)demand curves are linear

Along a consumer's demand curve, price reflects A)the costs of production B)the dollar value of the total utility from the good C)the dollar value of the marginal utility of each additional unit of the good D)the maximum quantity that could be purchased, given income E)non-rational decision making

If an individual's demand is elastic and price increases, what happens to total utility (TU), marginal utility (MU), consumer surplus (CS), and total expenditure (TE)? A)TU increases, MU decreases, CS decreases, and TE decreases B)TU increases, MU increases, CS increases, and TE decreases C)TU decreases, MU increases, CS decreases, and TE increases D)TU decreases, MU decreases, CS decreases, and TE decreases E)TU decreases, MU increases, CS decreases, and TE decreases

Arthur Bach is worth $780 million dollars.He goes into an upscale men's store and buys 32 green sweaters, each costing $200.If Arthur has maximized his utility from this purchase, what is the marginal utility of the thirty-third green sweater? A)cannot tell B)greater than $200 C)less than $200 D)0 E)$200

Exhibit 6-11 At point a in Exhibit 6-11, total expenditure on neckties is A)$5 B)$9 C)$20 D)$26 E)$45

Exhibit 6-11 At point a in Exhibit 6-11, the monetary value that approximates the total utility received is A)$5 B)$9 C)$20 D)$26 E)$45

Exhibit 6-11 At point a in Exhibit 6-11, consumer surplus is A)$0 B)$5 C)$6 D)$20 E)$26

Exhibit 6-11 If Ken is originally at point a in Exhibit 6-11 and then moves to point b due to a reduction in the price of neckties, his expenditure A)increases from $20 to $25, increasing both consumer surplus and total utility B)increases from $20 to $25, decreasing both consumer surplus and total utility C)stays at $20, leaving both consumer surplus and total utility unchanged D)stays at $20, but both consumer surplus and total utility increase E)decreases as price falls, increasing both consumer and surplus and total utility

Exhibit 6-11 At point b in Exhibit 6-11, total utility is valued at A)$30, consumer expenditure is $20, and consumer surplus is $10 B)$26, consumer expenditure is $20, and consumer surplus is $6 C)$20, consumer expenditure is $20, and consumer surplus is $0 D)$30, consumer expenditure is $4, and consumer surplus is $26 E)$20, consumer expenditure is $4, and consumer surplus is $16

Exhibit 6-11 If the good in Exhibit 6-11 were free, then A)total utility, consumer surplus, and consumer expenditure would be undefined B)total utility and consumer surplus would be positive, but consumer expenditure would be undefined C)total utility, consumer surplus, and consumer expenditure would all equal 0 D)total utility, consumer surplus, and consumer expenditure would all be maximized E)total utility and consumer surplus would be valued at $36; consumer expenditure would be 0

If you buy a good, its expected marginal value to you A)is equal to its price B)is greater than its price C)is less than its price D)may be less than or equal to but not greater than its price E)may be greater than or equal to but not less than its price

As price falls along a given demand curve for pretzels, A)quantity demanded, total utility, marginal utility, and consumer surplus increase; consumer expenditure decreases B)quantity demanded, total utility, and consumer surplus increase; marginal utility and consumer surplus decrease C)quantity demanded, total utility, consumer surplus, and consumer expenditure increase; marginal utility decreases D)quantity demanded, total utility, and consumer surplus increase; marginal utility decreases; consumer expenditure might increase, decrease, or remain constant E)quantity demanded, total utility, marginal utility, consumer surplus, and consumer expenditure all increase

A decrease in price along the elastic segment of a demand curve will A)increase total utility, marginal utility, consumer surplus, and consumer expenditure B)decrease total utility, consumer surplus, and consumer expenditure and increase marginal utility C)decrease total utility and consumer surplus and increase consumer expenditure and marginal utility D)increase consumer surplus through a decrease in consumer expenditure E)decrease consumer surplus through an increase in consumer expenditure

Exhibit 6-12 In Exhibit 6-12, at a price of $2, consumer surplus is A)$4 B)$5 C)$10 D)$80 E)$200

Exhibit 6-13 When the price is P in Exhibit 6-13, the shaded area represents A)a shortage B)producer surplus C)a price floor D)consumer surplus E)a price ceiling

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4.If he buys three for $4 each, his consumer surplus is A)$5 B)$4 C)$1.50 D)$9.50 E)$12

Suppose Jerry consumes three hamburgers at McDonald's one evening.He figured the last one was just worth the price he paid for it.If the hamburgers he buys have a price of $1, then A)he earned no consumer surplus B)he would have earned consumer surplus if he had eaten one more hamburger C)he was irrational D)he may have earned consumer surplus on the first two hamburgers E)he earned $1 consumer surplus on the third hamburger alone

What happens to consumer surplus as price falls along a given demand curve? A)It always increases. B)It always decreases. C)It never changes. D)It increases only if price increases just a little. E)It depends on the elasticity of demand and supply.

Suppose that Hannah spends $3 to buy five biscuits.The marginal utility of the fifth biscuit is valued at $0.60; total utility of the five biscuits is valued at $4.20.Given this information, what do we know about consumer surplus? A)It is impossible to determine consumer surplus without knowing the marginal utility of the first four biscuits. B)It is impossible to determine consumer surplus without knowing the price per biscuit. C)It is impossible to determine consumer surplus without knowing the price Hannah was willing to pay for the first five biscuits. D)Consumer surplus is equal to $2.40. E)Consumer surplus is equal to $1.20.

Consumer surplus is A)the amount by which quantity supplied exceeds quantity demanded at the current market price B)the amount by which quantity demanded exceeds quantity supplied at the current market price C)the change in total utility derived from a one-unit change in the consumption of a good D)the difference between the price of the good paid by the consumer and the costs of production to the seller E)the difference between the maximum amount that a consumer is willing to pay for a given amount of a good and the amount that the consumer actually pays

When price decreases, consumer surplus A)increases B)remains constant C)decreases D)becomes negative E)may increase or decrease

The market demand curve is the sum of individual quantities demanded at each price.

Exhibit 6-14 In Exhibit 6-14, consumer surplus at a price of $2 is the difference between what consumers are willing to A)pay for a quantity of goods and what they actually pay, represented by triangle abc B)pay for a quantity of goods and what they actually pay, represented by triangle dcb C)pay for a quantity of goods and what they actually pay, represented by triangle adc D)receive for a good and what they actually get, represented by triangle abc E)receive for a good and what they actually get, represented by triangle dcb

If Debbye is willing to pay $50 for a pair of shoes but only has to pay $20 because the shoes are on sale, then her consumer surplus on that pair of shoes is A)$50 B)$20 C)$70 D)$30 E)$25

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is called A)producer surplus B)the substitution effect C)price discrimination D)the income effect E)consumer surplus

Consumers derive consumer surplus whenever A)the monetary value of total utility equals total expenditure B)the monetary value of total utility is greater than total expenditure C)the monetary value of total utility is less than total expenditure D)marginal utility is greater than total utility E)marginal utility is less than total utility

Suppose I am willing to pay $300 for a pair of Rollerblades and I purchase them on sale for $200.My consumer surplus is A)$300 B)3/2 C)$100 D)$200 E)$0

Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford Mustang: $20, 000.The dealer says, "You're in luck; we have one on the lot for $20, 000." Which of the following statements is true? A)Ferd will not buy the car. B)The car is not worth $20, 000. C)Ferd gets $20, 000 in consumer surplus. D)Ferd gets no consumer surplus. E)The dealer earns $20, 000 in consumer surplus.

A measure of consumer surplus in any market is A)total expenditure on the good B)the area above the supply curve and below the price C)the area beneath the demand curve D)the area beneath the demand curve and above the price E)the market price

If Ed is willing to pay a maximum of $200 for a tweed sport coat but buys one for $180, that $20 saved is A)his reservation price B)the store's producer surplus C)his total expenditure D)his marginal utility E)his consumer surplus

The consumers' surplus derived from the last unit of a good purchased A)tends to be less than 0 B)tends to be equal to 0 C)tends to equal the price of the good D)tends to be greater than the price of the good E)depends on the marginal utility of the first unit purchased

If Joel buys ten floppy disks, which are worth a total of $30 to him, and he pays $1 a disk, how much consumer surplus does he derive? A)$24 B)$15 C)$20 D)$10 E)$2 from each floppy disk

Exhibit 6-15 Which area in Exhibit 6-15 represents consumer surplus at market equilibrium? A)area a B)area b C)area c D)areas a + b + c E)areas a + b

Exhibit 6-15 Which area in Exhibit 6-15 represents the maximum amount that consumers are willing to pay for 10 opera tickets? A)area a B)area b C)area c D)areas a + b + c E)areas a + b

Exhibit 6-16 Exhibit 6-16 shows Reggie's demand for apples.If there are 100 people in this economy, and each has the same demand for apples as Reggie, what is the total quantity demanded in the market for apples at P = $6? A)600 pounds of apples B)200 pounds of apples C)the average of all the quantities demanded D)the average of all the prices E)the average quantity demanded divided by the average price

The market demand curve is A)any individual's demand curve multiplied by the number of consumers in the market B)the relationship between income and quantity demanded C)the horizontal sum of the individual demand curves for all consumers in the market D)the vertical summation of all individual demand curves E)the sum of prices paid at each quantity demanded

Exhibit 6-17 Consider Exhibit 6-17 which represents the market demand for DVDs.If the price of DVDs is $20 how much is consumer's surplus? A)$0 B)$20 C)$40 D)$60 E)$80

Exhibit 6-17 Consider Exhibit 6-17 which represents the market demand for DVDs.If the price of DVDs increases from $20 to $25, what happens to consumer's surplus? A)nothing B)decreases by $25 C)decreases by $17.50 D)increases by $17.50 E)increases by $25

If price equals 0, then consumer surplus A)is 0 B)is maximized C)is price times quantity D)is equal to marginal utility E)cannot be determined

A Medicaid experiment in California showed that a nominal fee of $1 charged for doctors' visits A)caused beneficiaries to stop going to doctors altogether B)significantly reduced benefits to those covered by Medicaid without reducing the cost of the program to taxpayers C)reduced the cost of the program to taxpayers without creating a substantial burden for recipients D)increased the number of doctors' visits per month by beneficiaries E)drastically reduced consumer surplus in that market

If medical care is provided free of charge, A)no one utilizes it B)beneficiaries consume it up to the point at which the demand curve intersects the vertical axis C)beneficiaries derive no consumer surplus from medical care D)beneficiaries consume the same amount they have always consumed E)beneficiaries consume it up to the point at which the marginal benefit of the final unit is zero

Requiring Medicare participants to pay a small fraction of the cost of their medical care A)reduces the quantity of health care they demand to zero B)has no effect on the amount of health care they consume, but does generate revenue for the government C)reduces their utilization of health care without compromising their health D)actually increases the amount of consumer surplus they receive E)amounts to a significant burden for most of those participants

The demand for medical care A)decreases as income increases, indicating that medical care is an inferior good B)is completely insensitive to price; that is, demand is perfectly inelastic C)is perfectly elastic D)is sensitive to the time component of cost E)varies directly with the price of that care

When a service, such as medical care, is provided free of charge, A)most people consume an infinite amount of it B)most people do not much care about getting good value for their money C)people do not derive any consumer surplus from it D)we say that the demand for it is perfectly elastic E)we say that the demand for it is perfectly inelastic

Opportunity cost is measurable only when prices are known

Time has a positive value for most people, but their opportunity costs of time differ.

A business executive who buys a portable computer so that she can work on airplanes is trying to reduce the cost of traveling.

Which of the following people is least likely to clip store coupons? A)a retired person B)an unemployed person C)a low-income worker D)a high-priced consultant E)a graduate student on summer break

One reason why a consumer might buy from a high-priced local hardware store instead of going to a big discount store several miles away in another community is that A)the local store will still have lower money prices B)the time cost of going to the local store is equal to going to the discount store C)comparing the sum of money prices and time cost, the local hardware store is a bargain for people who value time highly D)comparing the sum of money prices and time cost, the local hardware store is a bargain for people who earn low hourly wages E)the time cost of going to the discount store is less than going to the local hardware store

Which of the following statements is true? A)The money price is usually the same as the time price for most consumers. B)The money price of a good is always greater than the time price. C)The money price is always greater for high-wage earners than for low-wage earners. D)The time price is usually less for low-wage earners than for high-wage earners. E)The time price of a good is directly proportional to the money price.

Suppose you want to get to Orlando, Florida, for the week-long spring break.You can get there in two and one-half days by bus, and back in another two and one-half days.This will cost you $20 round-trip.You can fly there and back in four hours each way.This will cost $200.Which of the following is not true? A)It may be economically rational for you to go by plane rather than by bus. B)Depending on what else you can do that week, it may be economically rational for you to not go at all rather than to go by bus. C)The true cost of going to Orlando is either the time or the money you spend traveling, whichever it is you value more. D)The more you'd enjoy Orlando, the more economically rational it becomes for you to fly there instead of taking the bus. E)It is possible that it is rational for you to fly and rational for others to take the bus.

Which of the following must be true of an attorney who buys a portable computer so that she can work on trains and planes? A)She is engaging in conspicuous consumption. B)She gets utility from working. C)She thinks the opportunity cost of her time is higher than it really is. D)She thinks the opportunity cost of her time is lower than it really is. E)She is trying to reduce the opportunity cost of traveling.

People who use drive-through windows at restaurants and eat while on the road tend to A)have a low opportunity cost of time B)have a high opportunity cost of time C)not maximize their utility D)act irrationally E)value their money more than their time

The cost of consumption has two components: A)the substitution effect and the income effect B)the law of demand and the law of diminishing marginal utility C)the price effect and the income effect D)the money price and the time price E)saving and taxes

In most markets, each consumer A)faces the same money price and time price B)faces different money prices and different time prices C)faces the same money price but different time prices D)faces different money prices but the same time price E)has the same individual demand curve for the product

Your willingness to pay additional money for time-saving goods depends primarily on A)the opportunity cost of your time B)your wealth and property C)your social status D)the number of people in your household E)the distance between your home and your workplace

Which of the following people would be least likely to search the newspaper ads for bargains and clip store coupons? A)a retired person B)an unemployed person C)a waitress earning $5 per hour D)an attorney earning $100 per hour E)a student on summer vacation

Although some tastes do change over time, economists believe that tastes are relatively stable.If tastes were not mostly stable, then we A)could not even draw a supply curve B)could not reasonably make the other-things-constant assumption required for demand analysis C)would not have any concerns about still drawing demand curves D)could no longer eat food E)would be basing economic models on real life instead of making impossible assumptions

Which of the following economic explanations describes "cabin fever"? A)The marginal utility of winter is greater than zero. B)Each additional cold day brings more disutility. C)The law of increasing marginal utility as applied to cabins. D)Spending winter in a cabin is a normal good. E)Each additional cold day brings more utility.

Exhibit 6-18 On a normal day, Emily Mapai's demand curve for a cup of hot chocolate is initially shown as D in Exhibit 6-18.On a day when the high temperature does not get above zero degrees, her demand curve increases to D'.At a price P for a cup of hot chocolate, Emily's consumer surplus on a freezing day A)cannot be determined without calculating an exact marginal valuation B)increases a great deal over her consumer surplus on a normal day C)will vary depending on whether hot chocolate is a normal or an inferior good D)increases only if her demand curve is unit-elastic E)decreases a great deal over her consumer surplus on a normal day

Consumer surplus can be used to compare the effects of any of the following except for different A)market structures B)tax structures C)production technologies, such as capital-intensive versus labor-intensive D)public programs E)levels of medical care benefits

Exhibit 6-19 Refer to Exhibit 6-19, which is a demand curve for Medicare benefits.A $1 payment for services would reduce utilization, yet would still leave beneficiaries with a substantial consumer surplus.

After paying admission and entering King's Island Amusement Park near Cincinnati, Alan Fujiwara sees a list of waiting times for each attraction and ride.At this point, Alan's marginal dollar cost is A)zero and so are the marginal time costs of each attraction or ride B)zero, so he will base his next move on the marginal time costs of each attraction or ride C)greater than zero based on the admission price, so he will base his next move on the marginal time costs of each attraction or ride D)greater than zero based on the admission price, so he will ignore the marginal time costs of each attraction or ride E)less than zero and so are the marginal time costs of each attraction or ride

For any given price, the more elastic the demand for a product is, the greater will be the consumer surplus.

Exhibit 6-20 Refer to Exhibit 6-20.If D, D' and D'' represents the demand curves for the only three consumers in a market, then the market quantity demanded at a price of $30 will be: A)40 B)60 C)80 D)100 E)120

Exhibit 6-20 Refer to Exhibit 6-20.If D, D' and D'' represents the demand curves for the only three consumers in a market, then the market quantity demanded at a price of $45 will be: A)50 B)70 C)90 D)110 E)130

Exhibit 6-20 Refer to Exhibit 6-20.If D, D' and D'' represents the demand curves for the only three consumers in a market, then the market quantity demanded at a price of $15 will be: A)150 B)120 C)90 D)60 E)30

Exhibit 6-20 Refer to Exhibit 6-20.If D, D' and D'' represent the demand curvesfor the only three consumers in a market, then the market demand curve will be more _________ than each of the three individual demand curves. A)steep (slope will be more negative) B)elastic C)flat (slope will be less negative) D)inelastic E)both a and d

Exhibit 6-21 Refer to Exhibit 6-21.When this market is in equilibrium, the consumer surplus is the area of: A)A B)A + B C)B D)C E)D

Exhibit 6-21 Refer to Exhibit 6-21.When this market is in equilibrium, the consumer surplus will be area

Exhibit 6-21 Refer to Exhibit 6-21.In equilibrium the consumer surplus in this market is area A +